By Vicki Needham - 03/08/11 10:02 PM EST
The White House and House and Senate lawmakers across both parties back the elimination of the 1099 provision but are at odds over how to make up for $22 billion in lost revenue as projected by the Joint Committee on Taxation.
On March 3, the House passed a 1099 repeal measure that requires taxpayers who receive federal health insurance subsidies to reimburse the IRS with substantial penalties if they earn more than expected, especially after qualifying for the subsidy.
House Democrats called it a $25 billion tax increase on the middle class and said it would ensnare taxpayers who straddle the 400 percent income line and that a mere year-end bonus could push taxpayers "over the cliff" and force them to repay the money.
Last week, House Ways and Means ranking member Sander Levin (D-Mich.) argued that the Republican bill could require some families to pay back the tax break for federal healthcare if their salary changes during the year and pushes them over the threshold, forcing them to pay back thousands in tax breaks, leaving nearly 300,000 uninsured.
Meanwhile, House Republicans have argued that those taxpayers who exceed the income levels shouldn't receive the subsidy and should pay it back.
They also have argued they it's the same pay-for offered by Democrats last year to cover the "doc fix."
Sen. Mike Johanns (R-Neb.) is aiming to keep lawmakers on track to repeal the 1099 provision from the healthcare law, by introducing a measure that mirrors the House's proposed legislation.
The Senate recently approved its own repeal to the Federal Aviation Administration that amendment would pay for the repeal with unused previously appropriated federal funds to be determined by the Office of Management and Budget to cover costs.